Asian stocks rose, buyers cautious as markets await US inflation test

An investor looks at an electronic board displaying stock information at a brokerage in Beijing, China, August 25, 2015. Major Chinese stock indexes sank more than 6 percent in early trading Tuesday, after Monday’s disaster that saw Chinese stock exchanges suffer the biggest. Losses since the global financial crisis, destabilizing financial markets around the world. Photograph: Kim Kyung-Hoon/Reuters

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HONG KONG (Reuters) – Asian stocks made modest gains on Tuesday as persistent global cost pressures hampered buyers as investors turned their focus this week to US inflation data and the prospect of an increase in interest rates by the Federal Reserve.

Unexpectedly strong US jobs data on Friday increased the risks to the US consumer price report for July due on Wednesday, especially for the Fed’s policy outlook.

“US stocks were struggling to hold on to gains, as focus shifts from the strong US labor market to US CPI data later this week,” ANZ analysts said in a note.

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“The priority of lowering inflation to support expansion in domestic demand and sustainable job growth will ring loud and clear from the Jackson Hole Symposium on August 25 and 27.”

European markets were poised for a lower open, with Eurozone Stoxx 50 futures down 0.16%, German DAX futures down 0.16%, and FTSE futures down 0.12%. US stock futures, the S&P 500 e-minis, were up 0.22%.

“Moves in major financial markets continue to reflect fears of a global recession. European stock futures are down. Oil prices fell slightly in the Asian trading session and remained well below the highs of early June,” CBA analysts said.

MSCI’s broadest index of Asia Pacific shares outside Japan (.MIAPJ0000PUS) was up 0.3%. The index is up 0.5% so far this month.

Japan’s Nikkei (.N225) fell 0.95%, weighed down by weak quarterly earnings of heavyweights and declining expectations for the video game market, while Australian shares (.AXJO) rose 0.06%.

China shares rose, led by energy and renewable energy shares. But the gains were capped by the COVID-19 outbreak and tensions with the United States, following US House Speaker Nancy Pelosi’s visit to Taiwan last week, denting sentiment. Read more

The Chinese CSI300 Index (.CSI300) is up 0.16%. Hong Kong’s Hang Seng Index (.HIS) advanced 0.4%.

Wall Street closed mostly unchanged on Monday after last week’s massive jobs data boosted expectations that the Federal Reserve will press inflation, while a revenue warning from chip maker Nvidia reminded investors of a slowing US economy.

Investors are now waiting for Wednesday’s consumer price data to gauge whether the Federal Reserve can ease a bit in its fight against inflation and provide a better ground for economic growth. Read more

There were some encouraging signs for the Fed on the price front, as a New York Fed survey on Monday showed that consumer inflation expectations fell sharply in July. Read more

The Dow Jones Industrial Average (.DJI) rose 0.09% while the S&P 500 (.SPX) lost 0.12% and the Nasdaq Composite (.IXIC) lost 0.1%.

The bonds also received a safe haven offer due to concern over Beijing’s military conflict against Taiwan amid days of Chinese military exercises across the island.

The yield on the benchmark 10-year Treasury rose to 2.7608% compared to its US close of 2.763% on Monday. The two-year yield, which rose as traders expected a hike in the Fed funds rate, was 3.2056% compared to the US close of 3.216%.

The dollar index, which measures the greenback against a basket of the currencies of other major trading partners, rose to 106.35.

Oil prices extended their recent decline after suffering their worst week since April on fears of halting global demand as central banks continue to tighten. or

US crude fell 0.11 percent to $90.66 a barrel. Brent crude fell to $96.51 a barrel.

The dollar’s rally was a setback for gold, although it managed to rebound from Friday’s lows and was trading at $1,785.67 an ounce.

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Edited by Shree Navaratnam

Our Standards: Thomson Reuters Trust Principles.

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